Lack of technology IPOs is not short term barrier to growth of Internet of Things. There is money everywhere.

May 17, 2013 by Mark T Littlewood

BDO Tech Talk’s review of M&A and Capital Markets activity for the first part of 2013 is an interesting and good read though if you are looking for evidence that the capital markets are opening up to new technology companies, it would help if you are colour blind…

  • In this chart, the blue bubbles represent the size of Follow-On Public Offers for UK companies in the technology sector.
  • The red bubbles represent the size of Initial Public Offers for UK companies in the technology sector.

Anything that strikes you? Clue, there are no red bubbles…

BDO's Tech Talk Q2 2013. Capital markets, M&A in the UK Technology Sector.

BDO’s Tech Talk Q2 2013. Capital market activity in the UK Technology Sector.

You can see more here, including a roundup of the technology M&A activity for the UK technology Sector in Q1 2013.

The lack of new technology offerings on the public markets is hardly news but it is an ongoing concern for the long term growth of the technology sector in the UK.
BDO will be supporting our forthcoming Internet of Things Forum, Cambridge, June 27th. A number of companies, e.g. Cambridge-based Ubisense have already made it onto the public markets, but the lack of activity in public markets could be a significant barrier to the growth and long-term development of this fast growing, emerging sector.
According to Jim Tulley, Research Director at Gartner Group (who featured the Internet of Things as one of its Top Ten Technology Trends for 2013), in a Wall Street Journal article this week:

“Our research says that by 2018, 50% of the internet of things solutions will be provided by startups which are less than 3 years old. We can estimate what the internet of things will be like now. But we know that most of the things that will exist in 2018 we can’t even conceive of because they haven’t been invented yet.”

Is this bad news for the sector if the capital isn’t available to help those companies grow?

No. It isn’t all bad news for the IoT ecosystem as the venture community is actively investing in companies in the space including IQ Capital and DFJ Esprit in Neul, DFJ Esprit in GreenPeak and Intel Capital in SIGFOX illustrating the appetite for investment in the infrastructure plays in the sector while, for example, Ball Park Ventures‘ investment in BrightMove Media, a Springboard Accelerator Company shows there is appetite to invest in the applications that are being developed across all industries.

Meanwhile, smaller, project based ideas are finding sources of finance such as KickStarter and other crowd-sourced funding vehicles have been a significant help in getting their ideas to consumer. The Technology Strategy Board has also been supporting some of the development of IoT related technologies.

We also see significant interest in investing in the sector from investors with VC funds including Index Ventures, Invoke Capital, IQ Capital, Fidelity Ventures, Silicon Valley Bank, Octopus, Balderton Capital, Warburg Pincus, DFJ Esprit, Amadeus, Gresham Private Equity and MMC Ventures among those signed up to participate in the IoT Forum on June 27th in Cambridge.

[subscribe2]